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Welcome Home: Last-minute credit check before closing

theteam@elich.comspecial to the daily

Hold off on that new furniture, appliance, or car purchase until you’ve closed your new home loan. Buying a new home is exciting, and often, buyers realize that they’re going to need things that require a credit purchase, such as a new refrigerator, or different furniture. Or, the moving expenses themselves might go on a credit card as a matter of convenience. Beware of new purchases using credit prior to closing a new home loan.Starting on June 1 of this year, Fannie Mae has begun pulling a last-minute, or “refreshed” credit report just before closing to ensure borrower’s credit has not changed since the loan application. Spot checks have always been used, particularly when the initial credit check raises red flags; they are not uncommon in the last phase of loan approval, but this is a new policy that could affect many more loan applicants.The purpose is to find out whether the borrower has taken on or even shopped for new debt. Such new debt could negatively affect the borrower’s ability to repay the mortgage.Many say this is a safeguard against the foibles of the past, and will protect consumers. Lenders are worried that the policy will create logistical hurdles that could foil home purchases in this, a critical time in the housing market’s fragile recovery. They say new debt, even if it’s short-term, could change a borrower’s credit enough so that preapproved loans do not get funded.Fannie is reviewing the policy based on feedback from lenders, and the giant Treasury-backed enterprise will offer more guidance by the end of this month. To ensure you get your dream home and close on the house, do not open or apply for any lines of credit from the time you make loan application and closing.TheTeam@Elich.com is at Re/Max Properties of the Summit, 305 Main Street in Frisco. Butch Elich & Paula Parker are longtime locals providing real estate customers with award winning service. Find them at http://www.elich.com or search for them by name on Google, Twitter, or Facebook.


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